By classifying Internet access as an “information service” as opposed to a “telecommunications service” — which is the classification used for traditional telephone companies — the FCC cannot impose its “anti-discrimination” and “anti-blocking” rules on Internet providers, the court said.

“Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such.”

The decision is blow to President Obama, who made net neutrality a campaign pledge in 2008, and erases one of the central accomplishments of former FCC Chairman Julius Genachowski, who pushed the “Open Internet” order.

The order does give the FCC some daylight on rewriting regulations, but that will require the FCC to significantly rethink its broad classifications and regulatory approach, at least according to The Hill’s reporting. FCC chair Tom Wheeler said he will consider an appeal to the Supreme Court, but he may want to first read Judge Silberman’s partial dissent, especially its conclusion:

The Commission asserts – and the majority accepts – that broadband providers act as “gatekeepers” because each one has a so-called “terminating monopoly” over access to particular end users. These are terms, largely invented,7 the economic significance of which the Commission does not explain. All retail stores, for instance, are “gatekeepers.” The term is thus meaningful only insofar as the gatekeeper by means of a powerful economic position vis-a-vis consumers gains leverage over suppliers.8 The Commission made no effort to construct an analytic framework to measure this supposed gateway advantage – it is a rather slippery concept – nor did it adduce evidence to establish the economic power it would supposedly afford all broadband providers against all edge providers. …

On the other hand, the Commission asserts that broadband customers may have few alternatives or they may be locked into long-term contracts with early-termination fees. To be sure, some difficulty switching broadband providers is certainly a factor that might contribute to a firm’s having market power, but that itself is not market power. There are many industries in which switching between competitors is not instantly achieved, but those industries may still be heavily disciplined by competitive forces because consumers will switch unless there are real barriers. By pointing to potential difficulties consumers may encounter switching broadband providers, the Commission is simply implying that broadband providers have market power (market power lite?), without actually examining if and where they do. …

This regulation essentially provides an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces. The Commission does not have authority to grant such a favor.

The “rent seekers” in this case are Google and Netflix, who worry that carriers will charge more for transmitting their products because, er, it costs more in terms of bandwidth to do so. That opinion may carry a lot of weight at the next level, especially with a Supreme Court growing increasingly suspicious of executive-branch overreach as it is. A harsher ruling from above may close off the regulatory avenue of escape this decision seems to allow. On the other hand, this ruling effectively stops Net Neutrality enforcement immediately (unless stayed), and it will take some time for the FCC to rejigger its regulations to meet the appellate court’s scrutiny. Wheeler may decide that discretion is the better part of valor, and leave bad enough alone.

Commissioner Ajit Pai wants the FCC to stop altogether:

For the second time in four years, the D.C. Circuit has ruled that the FCC exceeded its authority in attempting to regulate the Internet. It is time for the Commission to take no for an answer. Unless Congress acts, we should stay our hand and refrain from any further attempt to micromanage how broadband providers run their networks. We should focus on removing regulatory barriers to broadband deployment, not imposing unnecessary rules that chill infrastructure investment.

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Commissioner Ajit Pai wants the FCC to stop altogether:

For the second time in four years, the D.C. Circuit has ruled that the FCC exceeded its authority in attempting to regulate the Internet. It is time for the Commission to take no for an answer. Unless Congress acts, we should stay our hand and refrain from any further attempt to micromanage how broadband providers run their networks. We should focus on removing regulatory barriers to broadband deployment, not imposing unnecessary rules that chill infrastructure investment.

A government agency head that wants to CURTAIL Government overreach???

This regulation essentially provides an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces. The Commission does not have authority to grant such a favor.

The Federal government will appeal to the Supreme Court, without doubt, as a deliberate stall tactic. It will not be heard, at the very earliest, until sometime in the 2015 term. I suspect that by that point, and the Federales know it, that the organic waste will have already impacted the rotating airfoil on a number of fronts and such a case will be moot.

For the second time in four years, the D.C. Circuit has ruled that the FCC exceeded its authority in attempting to regulate the Internet. It is time for the Commission to take no for an answer. Unless Congress acts, we should stay our hand and refrain from any further attempt to micromanage how broadband providers run their networks. We should focus on removing regulatory barriers to broadband deployment, not imposing unnecessary rules that chill infrastructure investment.

I’m torn. One the one hand, I love seeing the Fed’s get pushed out of regulating a market.

That said, the big internet providers are slimy and rotten, all the way down. I live in a rural area with real competition, so I have pretty good service. But those poor souls who only have Comcast are in poor shape.

They pay Comcast to deliver internet packets. Comcast advertises unlimited internet at a certain speed, so why should they charge Netflix more for delivering those packets? It would be like UPS charging Amazon more for the volume of packages Amazon ships. People get internet to watch netflix; that’s WHY they pay 40 bucks a month or so.

But Comcast is a monopoly in it’s area. Same with Time Warner, and the others.

So there IS a problem here. The solution needs to be deregulation, not heavy handed Govermental fiat. Or someone with the pockets, like Apple, could just build a new network. Sure, it would cost 30 billion or so to rewire the US, but we desperately need new blood in the industry.

I believe Andrew Jackson (the First Democrat) said it best and certainly will be reflected in the reactions of King Putt: “The Justices have made their decision, let them enforce it.”(This was related to Jackson running the Cherokee’s out of the Carolinas which he did in spite of the SCOTUS decision) Kind of like The First Affirmative Action Accidental President running the Stupid Party out of D.C.

This regulation essentially provides an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces. The Commission does not have authority to grant such a favor.

Yesterday’s oral arguments on the recess-appointment issue demonstrated that the Supreme Court may be ready to pull the reins sharply on the Obama administration’s exercise of power. Today, the DC Court of Appeals did the same thing.

I sense Obama, thanks to Reid’s nuking the filibuster for such nominations, is going to go into overdrive packing the DC Court with the kind of liberals who follow his approved thinking.

The “rent seekers” in this case are Google and Netflix, who worry that carriers will charge more for transmitting their products because, er, it costs more in terms of bandwidth to do so.

Regardless what one thinks of “net neutrality” the quoted snippet is misleading. Google and Netflix provide content to subscribers who actually carry the cost of bandwidth. Carriers want to get paid at both ends – by their subscribers as well as by those providing content to their subscribers.

Additionally, both Google and Neflix have offered to provide equipment directly to providers for free as well as free connections (bandwidth) to their servers. Providers have turned them down flat. So the bandwidth costs are a non-issue as they would actually be lower.

The end result is that large providers are holding both their customers and content providers hostage. Customers can’t access content BUT through their internet provider and content sites can’t access customers BUT through the internet provider. And with most providers operating as local monopolies, they have a hugely unfair advantage.

The internet is not a public utility, nor should it be treated as such. In fact, up until the late 1980s the network was largely nationalized and innovated at a snails pace. It was not until the primary backbones and data centers were privatized that the modern internet was born due to commercial incentives for private entrepreneurs. And by renationalizing the pipes, the federal government will be undoing all of the liberalization that has made the internet glorious.

Net neutrality is a solution to a problem that does not exist and only serves to centralize federal control yet again.

The “rent seekers” in this case are Google and Netflix, who worry that carriers will charge more for transmitting their products because, er, it costs more in terms of bandwidth to do so.

Let’s be honest – it’s also because those carriers compete with Google and Netflix in the very goods being delivered over their network. They wouldn’t gripe at all when it is their products being delivered and choking off bandwidth.

The end result is that large providers are holding both their customers and content providers hostage. Customers can’t access content BUT through their internet provider and content sites can’t access customers BUT through the internet provider. And with most providers operating as local monopolies, they have a hugely unfair advantage.

Onus on January 14, 2014 at 2:01 PM

The only way that is possible is where a monopoly/cooperative oligopoly is in place. The ISP’s have basically turned themselves into utilities where you don’t get to have any choice as a consumer – you get what you get and you will like it.

I have a bright idea for Google – instead of wasting time building robots, why don’t you expand Google Fiber? I’d be the first one to sign up to that. Then we’ll see if you practice what you preach. (I say this as a die-hard Android enthusiast)

I believe Andrew Jackson (the First Democrat) said it best and certainly will be reflected in the reactions of King Putt: “The Justices have made their decision, let them enforce it.”(This was related to Jackson running the Cherokee’s out of the Carolinas which he did in spite of the SCOTUS decision) Kind of like The First Affirmative Action Accidental President running the Stupid Party out of D.C.

The end result is that large providers are holding both their customers and content providers hostage. Customers can’t access content BUT through their internet provider and content sites can’t access customers BUT through the internet provider. And with most providers operating as local monopolies, they have a hugely unfair advantage.

Onus on January 14, 2014 at 2:01 PM

I don’t know the technical aspects of it, but isn’t streaming a movie over the internet using far, far more of the infrastructure (bandwidth I guess?) than, for instance, reading a blog post or even buying something on Amazon?

If I am correct in that, why shouldn’t the provider be able to charge more (whether directly to the user or indirectly by charging the content provider) for using significantly more bandwidth? It does make more sense to charge the provider something for the extra bandwidth their product uses than to try and charge the end-user, as the content provider can more easily pass that extra charge on to the end-user in their membership fees (a la netflix).

that, to me, is free market. If Time-Warner or Frontier want to charge extra to Netflix, then Netflix’s membership rates for people with those services would reflect that extra fee. Now some other provider can enter the fray and say “we don’t charge Netflix extra” and use that as a selling point.

It’s basically like Cable or Satellite TV and various channels. Each provider wants to be able to offer the popular channels, so have to come to terms with the channel or risk losing a popular channel and then seeing their consumers flee. Why should the internet be any different. I chose to use Roadrunner, but Roadrunner won’t let me access Neflix (or charges me more to access Netflix – either directly or by charging Netflix) and so I decide to find another provider that lets me access Netflix at lower cost.

I believe Andrew Jackson (the First Democrat) said it best and certainly will be reflected in the reactions of King Putt: “The Justices have made their decision, let them enforce it.”(This was related to Jackson running the Cherokee’s out of the Carolinas which he did in spite of the SCOTUS decision) Kind of like The First Affirmative Action Accidental President running the Stupid Party out of D.C.

One of the FCC Commissioners is Mignon Clyburn. Her entire experience in communications stems from her failed “community newspaper” in her father’s congressional district. After that, political influence gained her a commission appointment in South Carolina, where she failed to distinguish herself in any way.

Obama then appointed her to the FCC. Apparently he was looking for the least qualified black face he could find, and Jim Clyburn wanted to stay in the House.

This is the sort of individual Obama appoints. Elections matter.

Those who refused to vote for Romney because he wasn’t pure enough for them need to be held accountable for every action of the Obama regime’s second term.

I’m torn. One the one hand, I love seeing the Fed’s get pushed out of regulating a market.

That said, the big internet providers are slimy and rotten, all the way down. I live in a rural area with real competition, so I have pretty good service. But those poor souls who only have Comcast are in poor shape.

They pay Comcast to deliver internet packets. Comcast advertises unlimited internet at a certain speed, so why should they charge Netflix more for delivering those packets? It would be like UPS charging Amazon more for the volume of packages Amazon ships. People get internet to watch netflix; that’s WHY they pay 40 bucks a month or so.

But Comcast is a monopoly in it’s area. Same with Time Warner, and the others.

So there IS a problem here. The solution needs to be deregulation, not heavy handed Govermental fiat. Or someone with the pockets, like Apple, could just build a new network. Sure, it would cost 30 billion or so to rewire the US, but we desperately need new blood in the industry.

Vanceone on January 14, 2014 at 1:33 PM

But see? You are asking for government to regulate a monopoly it caused in the first place (whether caused by Federal or local government). First of all there is no “monopoly”. Check in any of those places and you will surely have, at least, 3+ internet options (from your cable company, phone company, satellite company, and so forth). The idea of a “monopoly” comes from people focusing exclusively on the service provided by the cable companies. And why is there just one cable company in your area? Because of crony capitalism and a regulatory environment that doesn’t allow for more than any one company in a specific area.

So, instead of “being torn” about this you should be a) cheering this decision, and b), now calling for more of these regulations so Comcast, Time Warner, Charter, and the others can fight it out anywhere in the country.

I don’t know the technical aspects of it, but isn’t streaming a movie over the internet using far, far more of the infrastructure (bandwidth I guess?) than, for instance, reading a blog post or even buying something on Amazon?

If I am correct in that, why shouldn’t the provider be able to charge more (whether directly to the user or indirectly by charging the content provider) for using significantly more bandwidth? It does make more sense to charge the provider something for the extra bandwidth their product uses than to try and charge the end-user, as the content provider can more easily pass that extra charge on to the end-user in their membership fees (a la netflix).

Yes, streaming a movie uses more, but you’re already paying for it. My service with cox is for a 50 mbps download connection unlimited (which actually means like 200 GB per month). So right now I’m paying them to deliver that amount of service to me. Why should it matter that I’m using it for streaming video over viewing a blog post? Why should NetFlix then have to pay Cox for the bandwidth that I’m already paying for? Google and NetFlix are also already paying for their end of the pipe and bandwidth. So what the cable companies want is for you to pay for your end of the pipe and Google to pay for their end of the pipe and your end. They’re trying to double dip and starve off competition.

There are two big problems with not having net neutrality. The first is the gatekeeper aspect of the broadband providers. In most areas the cable company has a monopoly. You might be able to get a broadband connection through your phone company but that varies based on how far you are from a substation. So most people have only 1, maybe 2, choices in where to buy. Saying Google should expand out it’s fiber offering is nice, but you run into other regulatory issues there. In many places they can’t due to the rules the monopoly cable companies have put in place. I’m all for getting rid of the net neutrality regulation if we get it where we can have real competition with the service providers and not monopolies.

The other problem with the cable companies is that they’re trying to destroy NetFlix and other start-ups with the costs to protect their other business interests. Comcast doesn’t want you using NetFlix because then you’re not buying PPV. They’ve also done stuff like introducing their own streaming video that’s exempt from your monthly data caps and other restrictions that put on outside providers. They’re leveraging their monopoly. Consumers loose with that. Once again, we need real competition for dumb data pipes.

Another factor here to point out is that bandwidth is cheap, like almost free. Once the network is built out the maintenance costs are almost trivial. It takes relatively little to do it. I’m a developer who works on some mobile video streaming products. You’d be amazed at how little the bandwidth and storage costs us. It was really shocking once we started pricing some of the things we need out. The rate increases consumers see from Cox and Comcast each year are nothing more then them using their monopoly to their advantage. Competition is needed.

Now some other provider can enter the fray and say “we don’t charge Netflix extra” and use that as a selling point.

Monkeytoe on January 14, 2014 at 2:44 PM

Except – where is this “other provider” going to come from? Do you mean that I can substitute DSL for Cable? ROFL!

Check in any of those places and you will surely have, at least, 3+ internet options (from your cable company, phone company, satellite company, and so forth).

ptcamn on January 14, 2014 at 4:14 PM

Except the options you list are NOT the same. They don’t even remotely offer the same capabilities.

Oh, and any competition between, say, particular phone companies (DSL) is bogus, since only one of those companies owns the line and switch through which your service will travel. They will determine how good your service is, regardless of the name on your bill.

Look, I agree with the court here. However, there is also a systemic problem with non-wireless services, in that they require comprehensive infrastructure. That infrastructure is expensive and difficult to grow out. Until that happens, “choices” aren’t really all they’re cracked up to be.

Just don’t buy into the idea that “oh, these services use up bandwidth and that hurts our other customers so you should have to pay more” is where this is coming from. Flat out – it is because 1) they compete directly against those content providers with their own content, and 2) they want to milk it for all it’s worth at both ends.

OK – again I don’t understand all of the technical aspects of this – let’s say that all my neighbors decide to stream a movie at the same time (and assume they all use the same provider), doesn’t that slow down the network?

If streaming big chunks of data (streaming video, and from my understanding, 99% of the fight over net neutrality is about the ability to stream video) doesn’t affect everyone else’s use of the network (i.e., slow it down), then I don’t disagree that it should all be treated the same.

but, if everyone jumps on netflix and starts streaming, will we still have ht same ability to use the internet? Will it slow things down significantly as more and more people stream video?

If the answer is yes, then the providers do indeed, need a way to make those streaming the video pay more for the streaming.

Looked at another way – your cable company charges you differently for different content (basic cable, extended packages, sports packages, premium channels). But you are arguing that an internet provider cannot do the same thing – charge different prices for access to different content.

Perhaps it is the cable company purposefully doing it – I have Timewarner – but I stream netflix videos and they often freeze up and crash during “peak” hours.

I understand your argument about monopoly – and to a large extent I agree with it – but if use of video streaming is going to slow down everyone’s internet access, then there has to be a way to charge extra for that.

If video streaming doesn’t effect overall internet capacity, then I guess I don’t care, except to the extent that I am leery of creating new regulations.

Or maybe EPA will tie bandwidth use to global warming, and regulate it that way.

petefrt on January 14, 2014 at 1:32 PM

Industry estimates vary from 3 or 4%, all the way up to 13%, but total global internet usage does consume a lot of electricity. Environuts would love to regulate the evil internet companies (minus Apple, of course, whom they love) and make the net “neutral.” So, if we are going to start seizing private assets here in the US, let the environut who is without capitalism cast the first smartphone! (saw that somewhere on the ‘net recently)

One possible real solution is to eliminate the actual content providers from the infratructure game. That is, turn the cabling to your house into a market that delivers whatever the heck you want: phone, movies, tv, internet, 3D printer files, whatever. Then let the content providers compete to actually deliver their product over that infrastructure. In this way, there’s no vested interest in something net neutrality. Heck, one of the selling points of certain infrastructure might be “we allow no porn across our infrastructure” or “we don’t care if you download 1TB a day, you paid for it, you got it.” Once you separate the two markets, you get a much healthier situation.

Except – where is this “other provider” going to come from? Do you mean that I can substitute DSL for Cable? ROFL!

Let’s get rid of the cable monopolies and allow other providers to run cable wherever they want.

But, I guess you are saying that you want to use the cable company’s lines because it is the better product, but you also want to be able to use those lines – that they paid for and maintain – to utilize the cable company’s competitors services, and you want to force them to provide that service to you without any extra fee?

I don’t think the answers are as easy as either side in this debate would have us believe. I can certainly see the providers perspective – “we built the system and now they want to force us to help our competition beat us?”

Versus the consumer, who, as you pointed out, doesn’t really have much choice in the provider. Of course, access to neftlix over a cable fiber-optic line wouldn’t even exist absent the cable company’s risk and investment. So, again, not easy to say what the right answer is.

Which leads me to my touchstone in such situations, any answer that has less gov’t involvement is better than an answer with more gov’t involvement.

This reminds me of the fight in NY to allow supermarkets to carry wine. Many conservatives are against it b/c it is unfair to the liquor stores that invested, took risks, etc. under the laws as they are (and which don’t allow liquor stores to carry any food). So now, these conservatives argue, it is better to keep the silly gov’t law of not allowing grocery stores to sell wine than it is to change the law to the more conservative/free market approach of allowing grocers to sell wine. But, I see the validity of both arguments.

One possible real solution is to eliminate the actual content providers from the infratructure game. That is, turn the cabling to your house into a market that delivers whatever the heck you want: phone, movies, tv, internet, 3D printer files, whatever. Then let the content providers compete to actually deliver their product over that infrastructure. In this way, there’s no vested interest in something net neutrality. Heck, one of the selling points of certain infrastructure might be “we allow no porn across our infrastructure” or “we don’t care if you download 1TB a day, you paid for it, you got it.” Once you separate the two markets, you get a much healthier situation.

GWB on January 14, 2014 at 4:57 PM

While this would solve the problem, how do you get there? You could only get there by having the gov’t take property from various owners. Take the cables away from the cable companies, Take the phone lines away from the phone companies, etc.

All of you who think that providers should charge more depending on which traffic is being used, you have NO IDEA what you’re talking about.

Compact merged with NBC Universal. They are part of the media. No net neutrality means that they can charge you extra, like oh $50/month if they wanted to, to get to Hot Air or Ace or Breitbart or any other conservative sites. In the meantime, HuffPo and MSNBC will be free. You’ll send a link explaining why the free market is a good thing to your neighbors, and they’ll say “sorry, we couldn’t see it, we don’t pay to access those sites”.

Do your neighbors streaming video use more bandwidth? Yes they do. There’s already a market control for that in place, and it’s called the speed of your Internet. Only do emails and news? Pay less for slower Internet. Want to stream video? Pay more for faster Internet. Take the additional money your high-paying customers pay and use it to build infrastructure.

Killing net neutrality won’t promote infrastructure development. It will just allow the companies to sit on their laurels while making more money. You think customers will all of a sudden be willing to pay more out of pocket for Internet service? If they were, the rates would already be higher. That’s the free market. Nope, instead people will elect to not pay for streaming video just like many families elect not to pay for cable and the providers will have the same amount of money that they have now, and why would they spend money on infrastructure for cheaper customers who are being served just fine? And if you’re suffering, too bad, it costs potential competitors too much money to come build infrastructure in your market.

Meanwhile South Korea is the king of the Internet world. I wonder how they got their infrastructure with net neutrality… /sarcasm

All of you who think that providers should charge more depending on which traffic is being used, you have NO IDEA what you’re talking about.

and then this:

Do your neighbors streaming video use more bandwidth? Yes they do. There’s already a market control for that in place, and it’s called the speed of your Internet. Only do emails and news? Pay less for slower Internet. Want to stream video? Pay more for faster Internet. Take the additional money your high-paying customers pay and use it to build infrastructure.

and then this:

You think customers will all of a sudden be willing to pay more out of pocket for Internet service? If they were, the rates would already be higher. That’s the free market. Nope, instead people will elect to not pay for streaming video just like many families elect not to pay for cable and the providers will have the same amount of money that they have now, and why would they spend money on infrastructure for cheaper customers who are being served just fine?

All in the same argument. The provider shouldn’t be able to charge differently based on usage, but the consumer can decide which provider to use based on usage. And, if not enough customers elect to pay for streaming video, then the companies won’t be forced to provide better service because there will be no demand. Which, I guess is bad? We should use gov’t to force companies to invest in more bandwidth rather than let the market decide?

The fight here really seems to comes down to people who want to be able to stream tv shows and movies and not pay extra for doing so versus everyone else who doesn’t want their internet slowed down by those streaming movies and tv shows.

the answer isn’t as easy as you think it is. Just because you don’t like the providers (“Compact merged with NBC Universal. They are part of the media“), doesn’t mean that the gov’t should necessarily get involved in price controls – or as you are calling it here “net neutrality”.

I’ll admit I don’t know the right answer here, there are decent arguments on both sides of the issue. But, I think it is interesting that some conservatives are passionately adamant that “the gov’t must get involved” and generally, their arguments come down to “the providers are bad, evil big corporations trying to make a big profit”. “conservatives” in favor of net neutrality don’t even acknowledge that this is a difficult question – they take it for granted that the gov’t should step in and control big, bad business (using a lot of the same arguments lefties use – the big companies aren’t making rational decisions based on demand, costs, and efficiencies but instead are just out to “get you”.

This shows why conservatism is so hard to pursue in practice. Even conservatives will passionately default to big-gov’t answers when it is their own preferred ox being gored (cheap streaming of video).

We see this with all kinds of things – ethanol subsidies, other farm subsidies, etc.

Another example, whenever we have threads about teachers – otherwise conservative people suddenly become about as pro-union, pro protected jobs as you can get.